Momentum Pinball StrategyThursday, 9 November 2017 00:00
Momentum Pinball trading strategy is a relatively quiet system, which involves trading 1-2 times a month. This intraday strategy is more suitable for traders who prefer rare, but profitable transactions, rather than many small orders.
Momentum Pinball is quite easy to use in practice, since it requires minimal use of technical tools. This makes the system suitable even for novice traders who don’t know how to use many trading assistants and cannot make a high-quality technical analysis.
In addition, this strategy is multicurrency, that is, it can be used for trading both basic and cross-currency pairs. All these facts give a huge advantage over many complicated trading systems that are difficult to understand.
The Essence of Momentum Pinball Strategy
All the work of the system is based on the indications of the same indicator. These are the indications that the robot generates as a result of dividing the values of the ROC indicator with a period of 1, by the values of RSI with a period of 3. You need to know a few things about such tools.
- ROC is a technical tool that allows you to determine the current momentum of the market. In fact, this indicator shows the closing levels of the last two candles, thereby measuring the rate of change in the price;
- RSI with a period of 3 allows you to specify the current trend.
Thanks to this algorithm, Momentum Pinball serves as a good tool for searching the entry points to the market. Moreover, the application has least settings, so it’s not difficult to work with. Here is an example of the settings menu:
Conditions for Entering the Market for Purchase
- If the Momentum Pinball falls below the "30" level at the close of the next day candlestick (in fact, this is the level of oversold market) – look at the closing parameters of the first hour candle of the next trading day;
- When the candlestick is closed, set a Buy Stop pending order. Open the position above the maximum of the first hour candlestick. The margin between the order and the extreme depends on the traded pair. You need to set the more distance for high-volatile pairs, than for stable pairs.
- To set the Stop Loss, you need to deduct the Buy Stop distance from the minimum of the first closed day candlestick - this will be the key position.
In other words, these are the conditions for entering the market:
Remember that the Momentum Pinball strategy requires position trailing!
Opening a Sell Order using the Momentum Pinball system
- In general, it’s necessary to perform exactly the opposite actions. That is, to track the first hour candlestick of a new day, if on the previous day, when the day candle was closed, the indicator rose above the level of 70. It should be noted that this level indicates an overbought market.
- After closing of the corresponding candlestick, you need to set Sell Stop. Once again, if you are trading a volatile pair, make a large margin from the nearest extreme.
- With the stop, the situation is just the same.
When the Stop Loss is triggered, set the new pending order at the same levels as the loss-making position was. In this case, we hope to continue the movement and close the order with profit.
How to Close the Positions
As mentioned above, the Momentum Pinball system requires trading 1-2 times per month. That is, on the first trading day it’s better to close the positions. As a last resort, you can trade for 2 days and close all the orders next day. If everything is done correctly, there will be an impressive amount on your account.
So, you can choose one of the following options to exit the market:
- At the end of the day, close all the orders. This will save you from risks and save your money;
- Close the position partially, and transfer the remaining orders to breakeven by trailing stop. You can also stop the stop loss manually;
- You can hold the position for 2 days, and when the highs of the second day close, close the order.
Features of Momentum Pinball Trading Strategy
The key advantage of the system under consideration is the precise formation of trade signals. Even a beginner will cope with this work and will hardly get losses. But depending on the server time of a specific dealing center, some brokers can interpret the time of entering the market in different ways.
Therefore, before you start trading on the Momentum Pinball strategy, you should definitely test it on the demo account of a particular dealing center.